Silver Price Forecast: XAG/USD retreats from weekly top, back below $31.00 ahead of US CPI
- Silver attracts some intraday sellers following an intraday uptick to a fresh weekly high.
- The technical setup favors bearish traders and supports prospects for additional losses.
- A move beyond the 50% Fibo. hurdle is needed to negate the near-term negative bias.
Silver (XAG/USD) struggles to capitalize on its modest intraday uptick and retreats slightly after touching a fresh weekly high, around the $31.30 region during the early European session on Thursday. The intraday selling picks up pace in the last hour and drags the white metal back below the $31.00 mark as traders now look forward to the US consumer inflation figures before placing fresh directional bets.
From a technical perspective, the XAG/USD now seems to have found acceptance above the 38.2% Fibonacci retracement level of the recent slump from the March swing high to a fresh year-to-date low touched earlier this week. The subsequent move up, however, stalls ahead of the 50% Fibo. level. Moreover, oscillators on the daily chart – though they have been recovering from lower levels – are holding in negative territory. This, in turn, warrants some caution before positioning for an extension of the weekly uptrend from the $28.25 region, or the lowest level since September 2024.
In the meantime, any further slide below the 38.2% Fibo. level is likely to find some support near the $30.55 region. Some follow-through selling, however, could make the XAG/USD vulnerable to accelerate the fall towards the $30.00 psychological mark en route to the 23.6% Fibo. level, around the $29.80-$29.75 zone. Failure to defend the said support levels would shift the near-term bias back in favor of bearish traders. The white metal might then decline to the $29.35-$29.30 zone en route to the $29.00 mark and eventually aim towards retesting the multi-month low, around the $28.25 region.
On the flip side, bulls might now wait for a sustained strength beyond the daily swing high, around the $31.30 region, which nears the 50% Fibo. level, before placing fresh bets. The subsequent move-up should allow the XAG/USD to reclaim the $32.00 mark and climb further towards the 61.8% Fibo. level, around the $32.15-$32.20 zone. The latter should act as a key pivotal point, which if cleared decisively will be seen as a fresh trigger for bullish traders and lift the white metal beyond the $32.65 intermediate barrier, towards the $33.00 round figure.
Silver 4-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
